On an average, the top 10 traded
companies accounted for 83 per cent of KSE-100 volume during the period
FY'01-FY'10. This shows that the market was highly skewed and relied on only a
handful of shares to generate trading activity.

Trading volumes and market
capitalization of KSE-100 index companies, as a percentage of the market's total
trading volume and market capitalization, continued to remain significantly high
in FY'10 with KSE-100 companies accounting for 96 and 73 per cent of the total
market capitalization and trading volume respectively. This means that a
significant portion of activity at the KSE was generated by only 15 per cent of
the total listed companies.

Moreover, out of the KSE-100 companies,
very few companies accounted for a major portion of trading activity. The top 10
companies by trading volume accounted for 65 per cent of the total trading
volume in FY'10.

FREQUENCY OF TOP 10 TRADED COMPANIES 2001-10

COMPANY

NO. OF TIMES IN TOP 10

PTCL

8

HUBCO

6

MCB

5

Bank of Punjab

5

NBP

5

DG Cement

5

OGDC

5

PSO

4

Lucky Cement

4

SNGPL

3

Source: Independent Research

The mix of the top ten traded companies changed slowly from
FY'01 to FY'10, which reflects the one-sidedness of the market in favor of some
companies. This slow change in the 'trading mix' indicated weak dynamism and
diversification in the market. A higher rate of change in the 'trading mix'
would show a high extent of dynamism and market depth. The trading mix also
indicated that the banking, cement, and fuel and energy companies attracted
investors in recent years. Trading activity limited itself to a handful of
companies only and sectors showed that the stock market lacked diversity.

SECTORAL REPRESENTATION IN TOP TEN VOLUME LEADERS

SECTOR

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Banks

1

2

1

2

3

3

3

4

5

3

Cement

0

1

3

3

0

3

3

0

2

0

Telecommunications

1

2

1

1

1

1

4

0

1

1

Fuel and Energy

3

3

4

4

3

3

0

3

1

2

Others

5

2

1

0

3

0

0

3

1

4

Source: Independent Research

(The writer is assistant professor
teaching economics and finance at SZABIST.)